Iran hopes the new European financial measure would help bypass the US sanctions

Tabnak – After months of high-level contacts between Iranian and European officials and in a bid to save the 2015 nuclear deal from a total collapse, the European parties of the deal today officially announced the launch of a special mechanism to continue trade interactions with Iran. The Measure is supposed to help Iran bypass the American sanctions.

German public broadcaster NDR reported on Thursday that Germany, France and Britain had registered the mechanism, which will be named the Instrument in Support of Trade Exchanges (INSTEX).

The payment channel, the report said, would be based in the French capital, Paris, and managed by a German banking expert. INSTEX is initially intended to be used for selling food, medicine and medical devices to Iran, but it could also be expanded in the future.

“It (the payment channel) won’t change things dramatically, but it’s an important political message to Iran to show that we are determined to save the JCPOA (the nuclear deal) and also the United States to show we defend our interests despite their extraterritorial sanctions,” a European diplomat was quoted as saying by Reuters.

Meanwhile, an Iranian deputy foreign minister said INSTEX is going to involve non-European countries and companies as well in the next step. In an interview with Iran’s state TV on Thursday, Deputy Foreign Minister Abbas Araqchi, who is in Bulgaria as part of a European tour, provided a description of the INSTEX.

“The purpose of this mechanism is to bring the whole payments between Iran and Europe and all of our exports and imports into this financial mechanism, through which the (trade) exchanges of the two sides would take place,” Araqchi noted, adding that a same mechanism is planned to be formed inside Iran in order to organize the Rial-based exchanges for the Iranian businesses.

The senior diplomat underlined that the newly-established mechanism will fully serve Iran’s interests when “the non-European countries or companies could also have access to it”, saying the next step would apparently enable the non-Europeans to use the channel.

“In that case, the set of our international purchases could be carried out under this mechanism,” he noted.

Asked about how INSTEX would exactly work, Araqchi said the payment channel’s function will be determined during expert meetings between Iran and Europe, noting, “Our Central Bank should enter talks with the mechanism and define how the job would be done.”

He further dismissed the notion that the mechanism would uphold only the businesses that are not sanctioned by the US, stressing that the channel has been basically designed to cover the sanctioned items.

In a move criticized by much of the international community, US President Donald Trump withdrew America from the JCPOA last year and re-imposed the anti-Iran economic sanctions, which it had lifted as part of the agreement.

The remaining signatories -- China, France, Germany, Russia and the UK – vowed, however, to defend the JCPOA and keep Iran in the deal by providing it with the sanctions relief it has been promised.